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Tiered price patterns differ across regions

Monday, July 16, 2012 14:50

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(Before It's News)

S&P Dow Jones Indices publishes tiered price data for 16 of the 20 cities (MSAs) it covers. The tier breakpoints are price levels that divide monthly sales pairs into thirds in each MSA. Home price trends within these cities do not behave the same across and within the tiers. To follow are a few examples of such differences.

Beginning in 2010, both Atlanta and Chicago saw their low-tiered markets go into a steep decline, and neither is showing any sign of a turnaround.

In Atlanta, all three tiered indices closely followed each other until about the middle of 2010. When the Atlanta market peaked in July 2007, all of the tiers saw price appreciation of about 30-40% from their January 2000 levels. Since then the low-tiered market has fallen sharply, far outpacing the decline in the other tiers, particularly since 2010. The low-tiered market reached the lowest level in its 21-year history in March 2012 (reported on May 29th) with an index level of 47.15. This means average home prices in that market were below where they were more than 21 years ago. While not historic lows, the middle-tiered and high-tiered markets also reached post-bubble lows in March.

id="attachment_4095" class="wp-caption alignnone" style="width: 430px"> rel="attachment wp-att-4095" href="http://www.housingviews.com/2012/07/16/tiered-price-patterns-differ-across-regions/atlanta-2/"> class="size-medium wp-image-4095" src="http://www.housingviews.com/wp-content/uploads/2012/07/atlanta-420x232.jpg" alt="" width="420" height="232" /> class="wp-caption-text">S&P/Case-Shiller Atlanta Tiered Home Price Indices. Sources: S&P Indices and FiServ

The chart above shows that Atlanta’s low-tiered market sees average home prices about 52% below what they were in January 2000, more than 12 years ago; whereas the high-tiered market is only about 3% below 2000 levels. Over the past 12 months, the low-tiered market fell by 24.0%, the high-tiered market fell 10.2% and the aggregate market was down 17.0%. From their peak, Atlanta low-tiered home prices are down 65.5%, the high-tiered market is down 29.9%, and the aggregate market is down 38.1%.

For much of 2010 and the first half of 2011, the Chicago market was displaying similar behavior. It began to rally around May 2011, but that only lasted a few months. It went back into a declining trend around September 2011. While the low tiered market had risen more than the others at its 2006 peak, the rate of decline in that market had far outpaced other home prices in that region. The low-tiered market reached its crisis low in April 2012 with an index level of 79.51. This is the same level as April 1995; 17 years ago.

id="attachment_4098" class="wp-caption alignnone" style="width: 430px"> rel="attachment wp-att-4098" href="http://www.housingviews.com/2012/07/16/tiered-price-patterns-differ-across-regions/chicago-3/"> class="size-medium wp-image-4098" src="http://www.housingviews.com/wp-content/uploads/2012/07/chicago-420x232.jpg" alt="" width="420" height="232" /> class="wp-caption-text">S&P/Case-Shiller Chicago Tiered Home Price Indices. Sources: S&P Indices and FiServ

The chart above shows that Chicago’s low-tier market is seeing average home prices about 20% below what they were in January 2000; whereas the high-tiered market is about 8% above 2000 levels. Over the past 12 months the low-tiered market fell by 5.6%; whereas the high-tiered market fell by 5.0% and the aggregate market was also down 5.6%. From their peak, Chicago low-tiered home prices are down 56.7%, the high-tiered market is down 32.7%, and the aggregate market is down 38.4%.

Now compare what is happening in Atlanta and Chicago to Boston and San Diego.

In April 2012, Boston’s low-tier market saw average home prices about 56% above what they were in January 2000; whereas the high-tiered market was about 45% above 2000 levels. In other words, since 2000 low-tiered homes have hung on to a bit more of their value than the high-tiered market, completely different than what we see in Atlanta and Chicago. Over the past 12 months, the low-tiered market rose by 5.4%; doing much better than the high-tiered market which was down 0.8%; and the aggregate market was up 0.1%. From their peak, Boston’s low-tiered home prices are down 28.8%, the high-tiered market is down 14.5%, and the aggregate market is down 19.3%.

rel="attachment wp-att-4103" href="http://www.housingviews.com/2012/07/16/tiered-price-patterns-differ-across-regions/boston/"> class="alignnone size-medium wp-image-4103" src="http://www.housingviews.com/wp-content/uploads/2012/07/boston-420x229.jpg" alt="S&P/Case-Shiller Boston Tiered Home Price Indices. Sources: S&P Indices and FiServ" width="420" height="229" />

In April 2012, San Diego’s low-tier market saw average home prices about 53% above January 2000; whereas the high-tiered market was about 50% above 2000 levels; another case where low-tiered homes have hung on to a bit more of their value than the high-tiered market. Over the past 12 months, the low-tiered market fell by 2.3%; very close to the high-tiered market which was down 2.1%; and the aggregate market was down 1.8%. From their peak, San Diego’s low-tiered home prices are down 48.6%, the high-tiered market is down 33.1%, and the aggregate market is down 39.4%.